Nástroje, automatizace a praxe
How to Do an Annual Portfolio Review: Step-by-Step Process
Key takeaways
- Do your review once a year, ideally in the same month every year — this avoids emotional decisions.
- Check allocation, performance versus benchmark, fees, and your tax situation.
- Do not compare yourself to the market solely over the last 12 months — also track 3- and 5-year periods.
- Rebalance only if allocation drifts by more than 5 percentage points.
- Record your conclusions in writing — next year you will have the context.
An annual portfolio review is a structured check that verifies whether your investments still align with your goals, risk tolerance, and target allocation. It is not an attempt to time the market.
When and how to schedule the review
Choose a fixed month — September or January, for example. A fixed date eliminates the temptation to review after every large market move. The review should take 2–4 hours, not a whole day. You need: access to all accounts, your portfolio tracker, and notes from last year's review.
Four areas to review
- Allocation: Does the current equity/bond/cash ratio match your plan? A drift of more than 5 p.p. is a signal to rebalance.
- Performance: Calculate XIRR for the year and since inception. Compare with your benchmark.
- Fees: Check the TER (total expense ratio) of each fund. Is there a cheaper alternative with identical exposure?
- Taxes: Do you have unrealised losses you could harvest? Is the three-year holding period approaching? (see ETF taxes in the Czech Republic)
How to document the review
At the end, write a short note (half a page): current allocation, XIRR, what you changed and why. Next year you will read it and have context for further decisions. Feed the review output into your investment checklist.
FAQ
How often should I review my portfolio?
Once a year is enough for most passive investors. More frequent checks lead to emotional decisions and over-trading. An exception is a major life change — new job, divorce, inheritance — where a review outside the scheduled date makes sense.
Do I have to rebalance during the review?
No. Rebalance only if allocation drifts by more than 5 percentage points from the target ratio. Unnecessary rebalancing generates fees and tax events.
What if the market is in a downturn during my review?
Stick to the plan. A review during a downturn is an opportunity to buy at lower prices, not to sell. If the decline is causing you panic, that signals your actual risk tolerance is lower than you thought — which is valuable information.